Maximize Earnings: Get Paid for Your Assisted Living Facility

assisted living payment options assisted living revenue streams how assisted living facilities get paid long-term care insurance for assisted living medicaid reimbursement for assisted living private pay residents in assisted living starting an assisted living business Dec 02, 2024

Running an assisted living facility is about more than just caring for people. You also need to know how to make enough money to keep things running smoothly. The money you bring in helps you provide great care for your residents. If you want your business to succeed in the long run, it's super important to understand how you can earn money in the assisted living world.

In this blog, we’ll break down the main ways assisted living facilities make money. We’ll keep things simple, so you can easily understand how to get paid and grow your business. Let’s jump in and learn how you can make your assisted living facility a success!

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1. Medicaid: Government-Funded Support

Medicaid is a big way that assisted living facilities get paid. It’s a government program that helps cover costs for people who qualify. Here’s a quick rundown of how it works:

How Funding Works: Medicaid is a program where the federal government gives money to each state. The states then use that money to help pay for people who need assisted living (among other things). Each state decides how much money they will pay per day for each resident.
Billing and Payment: The facility charges Medicaid based on how many days a resident stays. For example, if your state pays $100 a day, and a resident stays for 30 days, the facility gets $3,000 for that month.
Resident Contributions: Many people on Medicaid also have to pay part of their own costs. This is called "share of cost." They use some of their Social Security money to help pay, while Medicaid covers the rest.

To make sure things run smoothly, most facilities have rental agreements that clearly state how much each resident needs to pay and what’s covered by Medicaid. This way, everyone is on the same page about costs.

2. Private Pay: Direct Payments from Residents

Another way facilities make money is through private pay. This is when residents pay for their care out of their own pocket. They might use their savings, money from selling a house, or get help from their family to cover costs.

Higher Earnings: Private pay usually brings in more money than Medicaid. Monthly rates for private pay residents can range from $5,000 to $15,000, depending on what the facility offers.
Contracts and Payments: It’s super important to have clear contracts for private pay residents. Make sure all the details are written down, like how much they’ll pay each month and what services they’ll get. Using automatic payments, like ACH (Automated Clearing House), makes paying quick and easy.
Special Services: If you have private pay residents, you might be able to offer special services or fancier rooms. This can attract people who want a little extra comfort and care.

3. Long-Term Care Insurance: A Growing Revenue Stream

Long-term care insurance is becoming a popular way for people to pay for assisted living. This is especially true as more and more baby boomers—people born between 1946 and 1964—start needing care. While it’s not as common right now, it’s likely to be a big deal in the future.

How It Works: Some residents have long-term care insurance that covers assisted living. The facility can bill the insurance company directly, which can make things easier.
Benefits: Getting paid through insurance means you don’t have to rely on the resident to make payments on time. It’s a steady and reliable way to get paid, which helps keep cash flowing smoothly.

Why Knowing Your Revenue Streams Matters

Knowing how your facility makes money is super important. It helps you plan for the future, manage your budget, and keep your business growing strong. Whether you rely on Medicaid, private pay, or long-term care insurance, each method has its own rules and things to consider.

By understanding each type of payment, making clear agreements, and using smart payment systems, you set your facility up for long-term success. When you have a solid plan, you can focus on what really matters—giving your residents the best care possible!

Take the Next Step in Your Assisted Living Journey

If you found this information helpful, please visit Assisted Living Investing for more resources. Remember to download our free Business Plan Checklist to help you create a successful business plan for your facility. In addition, consider applying to our Assisted Living Investing Mastermind program. This 12-month course is designed to guide you step-by-step toward owning and operating your own assisted living facility. With the added benefit of personalized coaching support, the program ensures you have the resources and guidance needed to succeed in this rewarding industry.

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